The State of Joblessness

This week, The Wall Street Journal published another critical examination of Michigan's political leadership, economy and budget. In a delicious irony, the online version posted a Michigan Economic Development Corp. advertisement (click on the image at right to enlarge) featuring actor Jeff Daniels alongside the piece.

This Onion-like juxtaposition was accidental, but The Onion.com itself has at times yucked it up at Michigan's expense, including this item, "Thousands Lose Jobs as Michigan Unemployment Offices Close."  

The Jeff Daniels-MEDC ad is part of the state's ongoing $40 million-plus business development and marketing campaign (Source: Michigan Senate Fiscal Agency, 2008) which includes the state's "Upper Hand" advertising, intended to market Michigan as a terrific place to do business, notwithstanding mountains of evidence to the contrary. That money comes largely from a 21st Century Jobs Fund economic development program, originally sold as a way to encourage (subsidize) high-tech investments.

Meanwhile back in the real world, Michigan is suffering the nation's highest unemployment rate (15.3 percent), its 43rd consecutive month with this distinction; our state Gross Domestic Product has fallen from 16th place in 1999 to 41st in 2008; and per capita personal income is now 11.2 percent below the national average, worse even than during the Great Depression.

All of this has occurred despite the best efforts of the state's chief "jobs" department, the MEDC, which is prominently featured in the "Upper Hand" ads.

The MEDC was created in 1999 to generate economic growth by picking winners and losers to be recipients of discriminatory tax breaks and subsidies. The Mackinac Center has published two statistical analyses of the MEDC's flagship tax break program, the "Michigan Economic Growth Authority," showing that at best it creates no new jobs. At worst, it may very well destroy them in net terms.

Gimmicky ad campaigns like the "Upper Hand" are very unlikely to improve the agency's results. This particular campaign features the Michigan-born Daniels. In this television spot Daniels calls himself a businessman and points to his thriving Purple Rose theatre, presumably as an example of his "business." (The ad also plugs the MEDC - very possibly its real purpose.)

However, Purple Rose Theatre Company is not a real business whose purpose is to generate a profit for investors. Instead, it's a non-profit 501(c)(3) charitable organization which, among other things, makes it exempt from onerous Michigan business taxes that are driving many entrepreneurs and investors out of business or out of the state.

No amount of selective tax breaks or advertising hype can overcome the realities of toxic state tax, labor and regulatory environments. Indeed, those gimmicky programs mostly just provide excuses and "cover" for lawmakers unwilling to undertake the political heavy lifting of reforming those realities.